Basics of Families First Coronavirus Response Act Payroll In Sage 100 Contractor
Video Transcript Below
So for those of you who don’t know me, my name’s Katelyn. I’ve been with Bangert for quite some time now, and I work on the Sage 100 software. I know some of the people in this session. We work pretty closely together. So it’s great to have you guys here. I’m super thankful that you guys took the time to be a part of this class. I know with everything that is going on right now that there’s definitely a lot of uncertainty and things that the software can help with, and help identify some of those points moving forward with payroll. So today we’ll be talking about the Families First Act and how we can adjust payroll to work with that act and the guidelines that it put forward. So today, we will be looking at two different approaches, the Sage approach and then what Monica and I have developed as the Bangert approach.
Both approaches are sufficient for what is needing to be done. It just depends on what your organization and employees need. But with this, we’ll be able to get the same result. It just will change how your end looks. So we’ll do that. I’ll do some demonstration on how I would set up the payroll calculations so you guys can see how that would look against an employee’s payroll record and how to set up that calculation type and deduction so it pulls correctly, and you guys can report on that later. So first let’s move into, let me pull up my screen here, on what the Families First Act is, what it entails, and how that’s going to affect your employees.
All right, so you guys should be able to see my screen right now. This is just a snapshot of an Excel document that I have that goes over the three different situations that would apply to the Families First Coronavirus Response Act. This was passed very recently, so there’s not a lot of information that’s available. So that definitely leaves us with a lot of questions. But this kind of gives us an overview of what is expected, the money amount that’s tied to it, and who would qualify for that compensation.
So let’s go through this to make sure we all understand what’s going on. So there’s two different parts of this. There are two different benefits. So there’s the paid sick leave, and there’s the paid family leave. The paid sick leave has two different types that would qualify for that benefit or that payout. So here we’ll see all of this is up to two weeks, or 10 working days, and it has to be related to the coronavirus. For this, there’s two different situations that would qualify to be under the paid sick leave.
So the first one is that the employee is sick or is presumptively related to the coronavirus and is getting tested. If that is the case with that employee, the benefit of this is that they could receive up to $511 a day, which breaks down to a dollar amount of 63, 87.5 per hour. So they can receive that for up to 10 working days, $511 a day. Or if you guys pay weekly, it’s $2,555 a week. The second option is that if that employee is caring for someone else who is sick due to the coronavirus and needs to take time to be away with that family member or that other individual, they can receive two thirds of their wage for up to $200 a day.
So that would be more individual-specific or employee-specific on what they would earn based off of what they currently earn. So if they earn $10 an hour, they would get six dollars and 67 cents up to $200 a day, up to $1,000 a week for 10 days, for 10 working days. So everything I will be showing you guys today will be as if your business pays weekly and computes payroll weekly. But we can show you guys how to set it up if you guys pay biweekly. The other one is the paid family leave, and this is up to 12 weeks. So this is a longer time period, and that’s if somebody needs to step away for however long up to 12 weeks, if their school daycare, anything like that, closes due to the coronavirus.
Which it sounds like a lot of, especially in this industry, that’s going to be applicable to a lot of employees with the stay at home order if their family members, children, whoever they take care of is at home now a lot of businesses are closing. So the rule with this is that the first 10 days are unpaid, but can be overlapped with paid sick leave if applicable. Then after that, two thirds of the employee’s wages or a max up to $200 a day. So same thing on this part two of the sick leave, but after 10 days would this kick in, if that makes sense. So this can kind of double dip in the sense that for the first 10 days, it’s unpaid unless they can qualify for this line, the second line of the sick leave, if that makes sense. I have some chats coming in. Let me see if there’s … Will there be handouts? Yes. So good question. Thank you for stopping me.
This is actually going to be a recorded session, so you guys have the distinct honor of hearing my voice in your email probably in a couple hours. So everything that is presented here, I’m recording now and will be emailing to you guys either this afternoon or tomorrow morning at the very latest. And so that’ll give you guys a reference. I can include this attachment if that helps. I’m a super visual person, so I needed to see it lined out. But yes, this will be shared with you guys. It will also go on our YouTube page, and it will also be emailed to you guys shortly after this.
And that brings me to the next thing. If you guys have questions throughout, I want to say I’ll get to them all. I don’t know how interactive it will be, but if not, I’ll share with you guys my email and contact number to shoot me an email, and we can always chat afterwards. So if there’s any more questions, let me know. But this is how I understand it to be, this law, and that’s how Bangert and Sage is proceeding with how to set up payroll calculations.
So like I said, there were two different approaches that we came up with, and I’ll show you both. It just kind of depends on how you want to proceed as an organization. But please keep in mind, if there’s anything that doesn’t sound right, check with your guys’ accountant, because they will have more information on how to pull it out of the right account. This would just be how to set it up in the software. So if you guys can see my Sage, everything in here is sample data, so no employee’s information is related to a real person. This is all just for demonstration purposes.
So let’s go to payroll calculations. So in the five three one window where you guys have all of your pay calculations already inputted, we’re going to be creating three different pay calculations. This is the Bangert approach for how to navigate through the coronavirus and the Families First Act. So there’s several different ways to put this in, but this is what we feel is the best way. Since there’s three different situations, we’re going to create three different pay calculations.
Let’s see where I’m at here. Well, let’s label this number 44. And you guys can label this however you want. Families First Act, paid family leave. The paid family leave is the one that has … it’s the 12 week one. On all calculations, this tax type will be none. The next one we’re going to do is the calculation method, and this is going to be number eight, which is per hour, all hours. Actually, let’s start over here. Let’s do the family one, or the sick leave one first, because that’ll be a lot easier for us to do the other one. Family First Act. And we’ll do paid sick leave one for the first situation.
Again, this will be none on the calculation. The method will still be the same on all three calculations. It’ll be eight one, so per hour for all hours. This type is going to be added to gross. This is kind of where it gets a little tricky. They don’t have to … I think in theory it would be nice to think that people would have two full days, or two full weeks off and use this, and that’s a very simplistic approach. We’re going to add it to their gross, and that’s going to be the simplest way to get it onto their paycheck for them to take home with them. This should already be defaulted to none. The default rate for the first situation of paid sick leave, it’s going to be at $63 and 87.5 cents. I got that by taking the $511 max here, $511 a day divided by eight hours gets me that hourly rate.
And this is assuming that an organization pays weekly, so this max would be $511 times five working days, which brings us to $2,555 flat for our default max, because we don’t want to pay more than that. The way this is set up is there’s a credit issued to the employer. So we’re going to leave this as it is, as the payroll calc for the rate and the max. This will still say … we’re going to put this at dollars per check. And that’s assuming that with this max [inaudible 00:10:42], if you pay every two weeks, you would just double this max. So that would be $5,000 and some change for the maximum, if you guys pay every two weeks.
Here, this is where it should still be the same for your organization. This shouldn’t really change your job expenses. For us with the standard data that comes in the software, it’s very simplistic, and these are our expense accounts that we pull from. And then this would be where you guys pull your payroll from. Ours is just a payroll checking account. Here’s one thing that’s going to get … and this is where if you guys have a CPA, you would want to loop them in on this conversation.
This is not, you don’t have to pay FICA taxes with this. So that would include social security and Medicare. The reason being is that in this first situation, there is a credit that offsets 100% of what the employer will pay for the sick leave. I know that kind of gets a little tricky. Based on the act that was passed, it doesn’t need to be subject to FICA taxes. Everything else will need to be FICA … or everything else will need to be taxable. So part of this, this is what differentiates the Bangert way from the Sage way, is these two calculations right here, are un-checking those boxes. Every other calculation should have that on there, but we’re going to uncheck them for the three calculations we’re going to make today. And then everything else should be however you guys set it up down here, if you guys have a [inaudible 00:12:33] or anything like that. So we’re going to go ahead and save this one.
So like normally when you create a new payroll calculation, this is only going to apply … you will have to go in manually to the employee’s calculation page and add this and make this an active calculation, if this is how they are proceeding with work. So if this is somebody that you need to adjust for, go to employees. Well let’s just say our dear friend Mark needs to be on this. You will add this, I think that was 44, and you will say yes. Does that make sense? So this will not be … Normally on payroll calculations, you would go in, and once you’ve created it, you would go to that option, update employees, update everybody, and that’s how you would apply it to the whole organization.
And that’s not the approach we want because some people will not utilize these. They won’t need this pay for sick leave if they still work. So you’ll go in, and this is on every calculation that you will need to input, and then apply on the employees. If our good friend Mark needs to have this sick leave there, type in that calculation number, make sure it’s an active calculation, and these rates should already pre-populate, and then click save. I’m not going to save it because that would mess up my sample data, but you would click save, and then everything else will calculate for him. We’ll use Mark as our test subject. I’ll delete him later as an employee.
So Mark is good to go. Let’s move on to the second payroll calculation. And this will be the second situation that would fall under the paid sick leave. So this would be if somebody is caring for another individual or taking care of somebody, like a child, if that qualifies with the coronavirus. And then they’re going to receive two thirds of their wages up to $200 a day. We’ll keep it uniform. I’m super particular [inaudible 00:14:59]. And this is paid sick leave [inaudible 00:15:04]. Tax type, still going to be none. Calculation method will always be that eight, which is per hour for all hours. You’ll have to do the calculation method first and then do the calc right above it. I don’t know why that is. I’m just learning. But that will be, again, added to gross, and that’ll be the best way to have the employee take it home at the end of the week.
On this one, again, they’re only going to receive up to $200 a day, but they’re only going to receive two thirds. So we’re going to put the rate, which is a default. So 200, I got this number by $200 a day times five working days in a week typically, so $1,000 will be our default max. And that breaks down to $25 per hour. Keep this in mind that we’re going to manually adjust for the two thirds amount, and that’ll have to be on an employee basis. Again, our max type will be number five, which is dollars per check. And again, this will just be standard for your organization on how you guys set up your expense accounts, but we’ll just use this for now.
Okay. And again, in these two areas, we will need to uncheck social security and Medicare, because it’s not subject to FICA. And we’ll assign this to be number 45. Okay. Again, if we need to assign this to an employee, but this has an active account, we can put Mark, our dear friend. To do this, go to Mark’s employees, his employee record on five two one. Go to the calculations tab, and you’ll be able to see everything that he currently is being deducted for. And make sure that is an active population. To do this, if Mark needs to … and we’ll make the Families First Act, the first situation, inactive for this demonstration, but for the second situation …
Oh my gosh, that … Oh, okay. For the second situation, we will need to manually do two thirds of what Mark makes. So part of this is where it gets a little tricky. To do that, this will have to be two thirds of what his hourly rate is. So we will have to change this because you have to have some rate in here. And we’ll save that for the time being, but just know that I changed his hourly rate, assuming he would make $25 as his two third amount. And we’ll create a payroll record that would reflect that.
Let’s make the third calculation type, and then we’ll get into how it’s going to look on a payroll record once all the calculations are ready. This will be number 46. And this will be Families First Act, and this will be paid family leave. Again, the tax type is zero. Calculation method is number eight, which is all hours per hour. [inaudible 00:18:54] in your Sage, you probably noticed this morning there was an economic response plan. The link that they put in that message on your dashboard is the link to the act. So if you guys haven’t read through it yet or have questions on it, that would be a good resource to come out with for your guys’ organization. But Sage has already come out with theirs. So if you guys have access to the knowledge base, they will be producing a knowledge-based article that would relate to their response and their approach to the coronavirus.
Okay, so this is paid family leave. You guys can abbreviate however you want. That will be none. This will still be number eight. Add to gross will always be our calculation type. This is always going to be none. And then this box, it’s going to be the same amount because it’s still that two thirds amount. And while I just thought of this, on that last payroll calculation … down here. Yeah, okay. I had to make sure it’s dollars per check on that one. Cool. All right, last time guys, I promise. It’s been a long week.
Paid family leave. Add to gross. Same calculation, so $25. That rate is still going to be $1,000 per week. You guys can double that if you guys pay every two weeks. And then this will always be dollars per check. Again, same here. Your expense accounts. Again, it will not be subject to social security or Medicare. That will be the biggest part of setting this up correctly. And we’ll assign this lucky number 46. Again, we’ll turn it on as an active record. And we’ll say Mark again. Come through, add it as an active. Let’s turn this one back on, and we’ll make these inactive. Again, you shouldn’t apply these calculations unless the employee is needing that.
Otherwise, it could potentially mess up their payroll record, what pulls out of their sick leave, what pulls and how it calculates things. So only add this if you guys need to, if that’s what the employee is gone for truly. So we’ll save Mark as he is. Okay. Do we have any questions so far? I want to show you guys the Sage way as well. Is there any questions on what that approach was, or what that entails? Okay. I don’t have any, but we’ll stop and chat if there is one that comes through. So the second approach is what Sage has recommended we do. And it’ll get you the same result, it’s just a matter of how you input it into the system. So the first way that they have us doing it, let’s just pick Michael Brown.
Let’s see Michael. Let’s find a different employee that has vacation available. So a lot of times the organizations, especially in Sage, separate it between vacation availability on accrual basis, versus sick availability, so time that you would have off. Here we go. Here’s a good example. I doubled this earlier, but assuming that this is the same and this is how it’s accrued, typically companies just have PTO or paid time off, and that is a combination of vacation availability and sick availability.
For this example, let’s pretend David has the same amount, and he has six days he could be sick or he could go to the Bahamas, and it would still be 6.08 days. On Sage’s approach, you would, for the first part of it, depending on … let’s say he’s on the first part, and he has up to two weeks to replace his hourly wage, and he’ll get 10 free days at work if he is sick. With this, assuming he makes less than that hourly amount of $63.87, which Mark does, yep, or David does. We will change this. And this will just be 80. So 80 hours, assuming he works 40 hour work weeks, this will be 80 hours of sick availability. When we do this, it doesn’t change the vacation availability, and so that really turns into a PTO holding, if you will, so that won’t change anything.
So he’ll have 80 hours available to him if he needs to use that. We’ll save that. Yep. Again, he won’t have any calculations that will need to have this on there, but he is being deducted on those 80 hours. He would be deducted his employee social security and his employee Medicare, which, given the act, is not subject to be deducted for. So either he would be paying too much, and that could mess up his end of the year reports for filing. Let me show you again in a payroll record how we can override that approach. So let’s go to payroll records. We will find David Miller.
Just make this up here. So this isn’t. His pay rate already pops in here, so it should already pre-populate. We didn’t change that at all. And this week, he did 40 hours. Back over the time part. This is where both the Bangert way and the Sage way will overlap. I don’t know if any organizations use this currently, but there is an absence column and Sage on a payroll record. And typically within the standard system, minus my ones here, will have, for a funeral, for a vacation, for a family emergency, different reasons why an employee would be off.
And that’s really just for documentation reasons so you guys can pull a report or a query as to why they were gone. In my opinion, and the way Bangert is approaching it, the need for reporting on this will be essential, because while there’s still a lot of uncertainty on how to proceed with getting credits and everything back to the organization, reporting is going to be essential on how to get how much you guys paid for this sick leave or this family leave.
So one of the best approaches I could come up with is to, in the absence column, just like I am now, right click display detail and add record. Or if you push the F6 key, you guys can create your own reasons why people were absent. And then you can go through later and pull a report on why. So I’ve created three different absence reasons that reflect the three different situations of the Family First Act, and so that way I can label a payroll record on what it was classified for. So he was the sick leave. That was his reason.
To do this, sorry, let me go back and explain that a little bit better. Right click in the cell, click display detail, add record, and you guys can freely type in here. And that’s all there is to that. Click save. So you guys can label these however you prefer. I just wanted to see the percent on the sick leave. Click save, and those options become available to you. So when you click on it … our dear friend David was gone because he was sick for one week, 40 hours, because we pay weekly, and that’s the absence record. And we can pull a report that would show that.
It’ll calculate down here. He had 40 hours, he was going to get paid $22 an hour, or $23 an hour, excuse me. He’s going to take home $920 before taxes. That’s his pay. Now, when you guys do payroll records, this is just sample data. All the calculations will be here, on the type here. So let’s [inaudible 00:29:43]. Enter this in here, go over, delete all of these, these extra columns here. Yep, there we go. So that was a payroll record for David. It’s going to display the calculations that are being pulled, just like it does in his employee field if we go to David Miller.
Just like here, it’ll show on his employee record. There’s a column for override, and you’re going to click yes. Again, this is the Sage approach. And you will click yes, override for the amount that it calculates for that check. That will take off social security and Medicare. The difference between the Bangert approach and the Sage approach is, in our opinion, in our Sage opinion, when you override something, and some companies have issues with this right now, is if they override something, it’s as if it should have been calculated for and it still should’ve been pulled. However, you manually override it to not pull that money.
Not that the money is still not owed, it’s that you just didn’t take it out of that check. For the accountants that are on this call, we both know that at the end of the year when tax time comes and we pull reports, it’s going to be as if they didn’t make a social security or Medicare payment on that paycheck. So that would kind of skew the numbers on their end of the year reports. That’s the only difference between the Sage way and the Bangert way. I’m not going to try to persuade you on which way is better. That is 100% up for your organization to determine. But I know with all the conversation that Bangert has had this morning with this, we feel that it is best to create payroll calculations, and deselect the FICA taxes to get the best pull of what would be accurate.
Unfortunately, there is not a lot of information on how to best proceed. I know the IRS has not come out with a formal statement on this yet. And so that definitely leaves a lot of room for questions and comments and different things that are concerning, but this is our best approach that we have now. And so that’s kind of where we’re at. The other thing is that this goes into effect April 1st, so tomorrow. [inaudible 00:32:48] employees are eligible for this. So I would not set them up until an employee needs it. Some organizations are super small and are still, they don’t have that employee that’s leaving yet. So I wouldn’t mess with it if you didn’t have to. But at least when you do have an employee that is sick or needs to take care of somebody or needs to be home with their children, there is a pay type, a pay calculation that would be sufficiently used for them on the accurate pay card.
So at least they still take home money, and while the employer funds it for them, there is a credit. Let’s pull this back up here. There’s a credit that 100% offsets the costs will be paid to the employee by the employer later on. Again, that information on how to apply for the credit hasn’t come out yet, but that is, the employee will front the cost for the sick leave. And it is my understanding that it will be reimbursed either through FICA taxes or a different approach. And so that is where it currently stands now. There’s not a lot of information available. Does that make sense to everybody? I know that was a lot of information.
Kelly, you said, “Where is the report that you can run for the absence report?” That’s a good question. We’re still developing the best way to do that. I know that it needs to have several different things on there. Pay date or payroll date that went out in, because it needs to be after the act was enacted for or effective for. And it needs to have the employee name, how much was paid. And the outstanding question is how that’s going to affect health insurance premiums for the employee while they’re on the leave. And there’s a couple of things that we still need to figure out about the act in order to know what we need to create the report for. My hopes and dreams are that this is a standardized report that you guys could just access with a few clicks of a button, get the actual information that you need, and however that credit application works, attach it to there, in a simplistic world, and send that in.
I don’t think it will need to be a custom report, for those who have with custom reports, but there’s going to be more to come on that. And I’ll probably post a video instead of doing a class on that so you guys can review it and not have to sign up for this. So more to come on that. I’m sorry that’s kind of not a really good answer, but I know that there’s just a lot of questions about how to pull the right reports, what the government is going to look for on that report, and what the qualifications and expectations are on that. Once we figure that out, I will be glad to make a video on how I accessed it with my sample data, and hopefully that’ll help solve any questions you guys have. Or if you guys need to message me individually and get specific data, we can always work on that as well.
Jake, you said, “When un-checking the FICA and Medicare boxes for the calculation, isn’t it the employer side that is not taxed, and the employee is?” Yes, you are correct. So the employer will not be taxed on that. That’s kind of where the credit comes in. I really hope that the IRS, or whoever is in charge of that credit, will come out with a statement on how that’s going to work so that’ll be more clarifying for organizations when trying to apply for that credit. But it’s not subject to that. And that’s pretty much the only sentence of that act that made clarifying sense to me, is that those two boxes do not need to be checked on the taxable, what it’s subject to. But good question. Good question.
Are there any other questions for the current moment? I know this is a lot of information, and I promise you guys will probably have a lot more questions as you guys, one, input these into your system, two, have employees that are needing these benefits or the benefit values, or just in general as you guys move forward. Unfortunately, this time in the world is so unprecedented that a lot of companies are, not scrambling, but trying to figure out the best approach to how this is all going to work, and how it’s going to affect what they do moving forward. That’s why I wanted to present you guys with two different approaches that would show you different ways to either tax it or not tax it. I would definitely get with your guys’ CPA on that if you guys have one to kind of figure out the best approach for your company.
Let’s see, I don’t think there’s any more chats or questions coming in, which doesn’t surprise me. There’s a lot of information that was just given to you guys. So let me put this up here. I know this is very not official in any capacity. This is my contact information if any of you guys want to reach out to me. My direct line at the office, we’re in Olathe. We’re actually working from home right now, but our main office is in Olathe. This is my primary email, but if you guys want to set up a time with me to go over this again in detail, if you guys have questions about your specific organization, this is our coordinating team, and they can get you set up with a time on my calendar if I’m busy that morning and can’t respond via email.
I’d imagine that there is going to be a lot of questions coming in, so if I’m not super responsive upfront, it’s not that I personally don’t like you, or your company and I don’t get along. It’s nothing like that. There is a lot of comments and inquiries about this, and so if I don’t respond, emailing that coordinator@bangertinc, they can definitely get you a time slot set up with me. Even if it’s just a 10 minute phone call over lunch, we can knock it out and we’ll get you on the right path. Again, thank you guys so much for coming. I hope this was informational and helpful for you. And let me know if I can be of help for you guys. Thanks, guys. I’ll talk to you guys soon. Bye bye.